Things haven’t been going to well for the British pub industry. Across the country, thousands of pubs have been forced to shut their doors by high alcohol taxes, duties, and other business-unfriendly restrictions from the state.  Even the extended summer and World Cup this year provided little solace to the struggling industry.

Beyond the pain caused by the closing down of local institutions, this also represents a huge threat to the UK economy. According to the Campaign for Real Ale (CAMRA), pubs contribute around £23.1 billion each year. That’s not to mention the community role pubs often play.

While the business environment might be tough, up to a third of the cost of a pint beer can be accounted for by taxation. In effect, the Government has been pushing both an economically and culturally valuable institution to the wall, preventing the British local from diversifying and competing in an ever-changing market.

It was only two years ago that that supermarket alcohol sales overtook those of pubs. On top of high duties, publicans were, and still are, up against businesses that can afford to treat alcoholic drinks as “loss leaders”; supermarkets, for instance,  are able to sell drinks at a loss since they can make up for it in the sales of other complementary products.

On top of this, pubs are facing threats from demographic and cultural changes, such as millennials drinking far less than previous generations, or the rise in preference for healthier lifestyles.

Now, I wouldn’t be much of a free marketeer if I didn’t argue that curveballs like the competitive edge held by supermarkets or preferences changing with demographics should be welcomed. Usually, it’s exactly this kind of disruptive change in competition and tastes that stimulates healthy growth and diversification.

Why, then, hasn’t this been the case? Why do so many pub owners simply lock up and sell off in the face of competition, rather than shaking things up to meet new tastes and trump competition from stores?

The first reason may seem pretty obvious: it’s just not worth it. Selling beer to an ever-more-teetotal generation is hard enough without without having to raise the cost of a pint just to meet the tax requirements. With such high costs imposed by the state, and with a smaller consumer market to support them, it’s simply too expensive and risky for landlords to invest in trendier gimmicks for their pubs that might appeal to the new base.